Gold prices marched higher Monday, as investors fled to havens amid declines in stocks.
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Stocks plunged Monday and investors sought havens as oil prices hit the highest level since 2008, driven higher by supply fears amid a possible ban from the U.S. and allies on Russian crude.
Futures for the Dow Jones Industrial Average fell 470 points, or 1.4%. The index ended 179 points lower on Friday to close at 33,614.
S&P 500 futures signaled a start 1.5% into the red with the Nasdaq poised to drop 1.7%. Declines were more severe overseas, where Frankfurt’s DAX shed 3.6%. In Asia, Hong Kong’s Hang Seng Index tumbled 3.9%.
The selloff in stocks came as oil prices spiked to start the new trading week, surging to the highest level in more than a decade amid intense volatility in commodity markets following Russia’s invasion of Ukraine late last month.
Secretary of State Antony Blinken said over the weekend that the U.S. and allies were considering an outright ban on Russian crude, which would exacerbate supply fears for a global oil market that is already incredibly tight.
Futures contracts for U.S. benchmark West Texas Intermediate crude rose 7.5% to $125 a barrel on Monday, having neared $127 when prices jumped as trading opened on Sunday. Similar action was seen for international oil benchmark Brent, which surged 8% to near $128. It crossed $130 a barrel in early trading.
“Equity markets are set to open sharply lower as a result,” said Jim Reid, a strategist at Deutsche Bank.
“The news out of the U.S. over the weekend shows the momentum is building for fiercer sanctions on Russia.”
While tough financial sanctions have so far led to traders “self-sanctioning” Russian oil, pushing prices skyward, an outright embargo could see the situation get more extreme.
Oil prices are now at their highest levels since 2008, when WTI topped out around $140, with the past week seeing the fastest rise in prices in more than a decade. A year ago a barrel of crude was $61, which rose to $76 by the time 2021 was done. By late February, before Russia launched its full-scale attack on Ukraine, the price was around $92, and has spiked some 35% since then.
“Panic has been seen again in oil markets,” said Jeffrey Halley, an analyst at broker Oanda. “I am unsure where Brent crude goes from here. All I know is that high prices are here to stay.”
As investors fled to havens amid declines in stocks, gold prices marched higher. Futures contracts for the precious metal jumped near 2% to above $2,000 an ounce, the highest levels since mid-2020. Closing above $2,000 this week would mark just the second period that gold has breached that mark in almost 50 years.